Post-Katrina focus turns to home ownership

September 19, 2005

Bush's plans call for Urban Homesteading Act

By Jessica Swesey Inman News

President Bush is promoting home ownership in the wake of Hurricane Katrina with plans for an Urban Homesteading Act, which would make some federally owned land free to eligible low-income families through a lottery.

In return, the families would pledge to build homes on the lots with either a mortgage or help from a charitable organization like Habitat for Humanity.

Bush unveiled the homesteading plans Thursday during his address to the nation from Jackson Square, New Orleans, saying, "When the houses are rebuilt, more families should own, not rent, those houses."

"Home ownership is one of the great strengths of any community, and it must be a central part of our vision for the revival of this region," Bush said in prepared remarks.

The administration has yet to reveal how much land is available for the homesteading initiative or how families will be eligible. Critics of the plan have argued that free federal land won't go far enough to house victims if they have no income to pay mortgages.

The Department of Housing and Urban Development, in cooperation with other federal agencies, local governments and public housing authorities, will support the development of homes on federal property in New Orleans and cities across the affected region. The government also will encourage nonprofit organizations to commit properties to the effort.

Homesteading is not a new concept. In the late 1800s, people lined up for their chance at owning land the government was practically giving away as part of a plan to stimulate settlement of western territory.

The Homestead Act, passed during the Civil War on May 20, 1862, provided that any adult citizen – or person intending to become a citizen – who headed a family could qualify for a land grant of 160 acres. All families had to do was pay a small registration fee, build a house on the land and cultivate the land continuously for five years. After only six months' residence, a settler could own the land for a mere $1.25 per acre, a steal even in those days.

Thirty states were eligible for land settlement under the Homestead Act, and they were mostly located in the West, Midwest and some Southern states. Non-homesteading states included almost all eastern states and Texas.

About 8 percent to 10 percent of land in the U.S., or 270 million acres, was settled under the Homestead Act, according to the Homestead National Monument of America Web site.

An estimated 400,000 to 600,000 families were provided with new farms as a result of the original act and amendments, according to a report in Ancestry Magazine by author and researcher Michael John Neill.

Like housing policies of today, there is some disagreement among observers about whether the Homestead Act of 1862 ultimately succeeded or failed its original intention. According to some, the law did not provide the new beginning for urban slum residents that lawmakers were hoping for. Few families had the resources necessary to start a farm even if the land was free. Over time, many of the individual homesteads were replaced with a smaller number of larger farms, according to a discussion on Houghton Mifflin's American history Web site.

The Homestead Act remained in effect until 1976 when the Federal Land Policy and Management Act repealed it, but granted a 10-year extension on claims for Alaska. The last known homesteader is a native Californian named Kenneth Deardorff, according to the Homestead National Monument site. In 1974, the young Vietnam veteran filed a homestead claim for 80 acres of land on the Stony River in southwestern Alaska.

Today, a few states in the Midwest have revisited the idea behind the Homestead Act of 1862 to try to give people incentives to stay in rural areas and reverse a long-term trend of out-migration.

Sen. Byron Dorgan, D-N.D., in March introduced the "New Homestead Act of 2005," a bill that would use tax and other financial incentives to repopulate rural America, aiming to fight out-migration of people from rural communities and boost rural economies.

Dorgan's bill would create a tax credit for the purchase of a new home, as well as "Individual Homestead Accounts" to help build savings and access to credit and capital for people who live and work in rural counties that suffer from high out-migration. The bill also would provide investment tax credits that states could use to attract businesses to locate and expand in rural areas.

In addition, it would establish a "New Homestead Venture Capital Fund" for investments in start-up and expanding businesses, repayment of 50 percent of college loans (up to $10,000) for recent college graduates who live and work in high out-migration counties for at least five years.

Dorgan in a statement said that communities from North Dakota to Northern Texas have suffered population losses and economic devastation for decades, and that many rural communities are in danger of becoming ghost towns.

Several communities in Kansas also are offering free land and other incentives to help rural areas sustain and grow economically. Seven communities are identified on KansasFreeLand.com as participating in these programs. They are Atwood, Plainville, Lincoln, Minneapolis, Ellsworth County, Marquette and Chetopa.